This blog captures interesting news items from around the world for those strained by information overload and yet need to stay updated on global events of significance. The news items displayed are not in order of merit. (The blog takes a weekly off -- normally on Sunday -- and does not appear when I am on vacation, travelling, or otherwise busy.)
Joe A Scaria
Former Senior Assistant Editor, The Economic Times, India

Sunday, March 27, 2016

The worldwide IPO drought; Has the Brics bubble burst? FBI and the cracking of an iPhone

1 The worldwide IPO
drought (Goh Eng Yeow in Straits Times) It
has been a long, dry spell in the initial public offering market and the
drought looks unlikely to end any time soon. So far this year, only four IPOs
have surfaced in Singapore and all four were trading below their respective
issue prices, as of last Thursday.

Their lacklustre
performances are likely to dampen the ambitions of other companies planning to
launch their own IPOs. In New York, the IPO market is virtually shuttered,
except for the listing of a small handful of bio-tech companies. Hong Kong -
billed as the world's largest IPO market last year - is also suffering a slow
start to the year.

But there is a twist in
being a cornerstone investor now. In the halcyon days when IPOs sold like hot
cakes, the cornerstone ploy was used to attract high-profile names to IPO
hopefuls, giving them an aura of respectability for being able to attract such
powerful investors.

That, in turn, was
meant to whet the appetite of other institutional and retail investors to
subscribe to the new offerings. But with the souring of investor appetite for
IPOs, many of the new Chinese listings in Hong Kong have resorted to relying on
"friends and family", such as fellow state-owned enterprises, as
cornerstone investors to bolster their IPO order books.

Until 20 years ago, all
IPOs were truly public offerings. Except for a small portion of shares reserved
for staff and company associates, the rest of the IPO had to be made available
for public subscription. This changed with the onset of the 1997-1998 Asian
financial crisis, when merchant banks and brokerages were forced to place out
the bulk of the IPOs handled by them to clients because retail interest had
dwindled to almost zero. That sad state of affairs prevails to this day.

2 Has the Brics bubble
burst? (Simon Tisdall in The Guardian) The political crisis in Brazil over
economic mismanagement and high-level corruption, likely to come to a head this
week, has reinforced the fashionable view, popular among western governments
and businesses, that the Brics bubble has burst.

Members of the
exclusive Brics club of leading developing countries – Brazil, Russia, India,
China and South Africa – are failing to justify predictions that, separately
and together, they will dominate the 21st century world, or so the argument
goes.

But ambitious plans to
create an alternative reserve currency to the US dollar and challenge American
dominance in IT and global security surveillance have come to little.
Meanwhile, adverse economic conditions compounded by falling global demand and
lower oil and commodity prices are taking their toll.

Last November, Goldman
Sachs, where the idea originated, closed its Bric investment fund after assets
reportedly declined in value by 88% from a 2010 peak. The bank told the US
securities and exchange commission it did not expect “significant asset growth
in the foreseeable future”.

The problems facing
Brics members are remarkably similar, even though each country is different.
Russia and Brazil have both fallen into recession, while China, the principal
engine of world growth, has seen a sharp contraction in overall economic
activity.

In South Africa where
Jacob Zuma, the country’s president, and the ruling African National Congress
government are beset by allegations of corruption and malfeasance, big
questions surround the influence wielded by private individuals and businesses
over government appointments and policies. The backdrop is under-performing
state-owned companies, a depreciating currency, falling exports and rising
inflation.

But not all the Brics
are floundering. As the analyst George Magnus noted, India currently presents a
model of relative progress which the others might study to their advantage. “India
is certainly no paragon of virtue when it comes to corruption, nor is its
economic infrastructure efficient, but it is endeavouring to accelerate
economic reform, and competitiveness,” Magnus wrote.

To take their rightful
place in the 21st century, the Brics countries must create more open,
accountable, and trustworthy systems of governance. This is a challenge of
leadership, not profit and loss.

3 FBI and the cracking
of an iPhone (San Francisco Chronicle) Turns out there's a shadowy global
industry devoted to breaking into smartphones and extracting their information.
Now one of those hacking businesses may well be helping the FBI try to break
into the iPhone of one of the San Bernardino killers.

Late Monday, the FBI
abruptly put its legal fight with Apple on hold, announcing that an
"outside party" had come forward with a possible way to unlock the
phone. FBI Director James Comey said the method "may work." If so, it
could render Apple's forced cooperation unnecessary.

The announcement has
thrown a spotlight on a group of digital forensics companies, contractors and
freelance consultants that make a living cracking security protections on
phones and computers. Comey said the publicity around the Apple case encouraged
such people to come forward with new ideas.

Most such companies
keep a very low profile. Since the bulk of their business is with governments
and law enforcement, there's no reason to for them to advertise their services.
For the moment, no one outside the Justice Department appears to know who the
FBI's white knight is.

In the cybersecurity
arms race, Apple has managed to stay ahead of these forensics companies. "Anything
is crackable — it's just how much time do you have and how much money do you
have to spend," said Jeremy Kirby, sales director at Susteen, based in
Irvine, California, that says it's not the FBI's outside party.